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:.;;;! 66tli Congress, I HOUSE OF REPRESENTATIVES. | ^^^'^ 

• ■ :: 1st Session. I I No. Ul. 



"ill 



EXPENDITURES IN THE WAR DEPARTAIENT. 



July 28, 1919.-rOrdered to be printed. 



' Mr. Graham of Illinois, from the Select Committee on Expenditures, 
in the War Department, submitted the following 

REPORT. 

»| The select committee of fifteen, appointed under the resolution of 
ijl the House of the 4th day of June, 1919, for the purpose of investi- 
1, g'athig the contracts and expenditures of the War Department and 
j' for certain other purposes expressly stated in said resolution, have 
had under consideration certain of the ^lattei's committed to it by 
iJI said resolution and now present the folloVihg partial report: 
I Tne conunittee is continuing- its investigations of the matters and 
'i things submitted to it by said resolution and will make further reports 
' from time to time hereafter until it shall have completed its labors. 
The present high prices of food products and the need of the Gov- 
»>rnment for money suggests to your committee the necessity of a 
preliminary report relating' to the War Department's nonactivities 
ill the sale of the very large quantities of food supplies now held in 
torage in the United States. 
At the time of the signing of the armistice the Army was composed 
[■ approximately 8, 700, 000 men, 2,000,000 of whom "were in France, 
:i;ii and about 1,700,000 in continental America. An increase of this 
lijji force to 5,000,000 men had })een agreed upon by the War Depart- 
iill ment, and food for this enlarged army for eight "months in advance 
■•" vras being contracted for and accumulated at the time active hos- 
ilities suddenly ceased. 
The demobilization of the Army began immediately upon the 
signing of the armistice, and 800,000 soldiers were discharged by Janu- 
ary 11, 1919. This demobilization continued at the approximate 
rate of 80,000 per week, so that on the 24th of May, 1919, 2,252,000 
."j of the soldiers had been discharged and were definitely out of the 
A service. 

m In view of the tremendous quantities of food the Government had 
'" on hand on November 11, 1918, and the demobilization of the armed 
f(U'ces, it at once became apparent that the War Department possessed 
an immense quantity of food beyond the needs of the Army. 



2 EXPENDITURES IX THE WAR DEPARTMENT. ^ ?^ CXOl/ 

Actuated by this condition, Gen. Peyton C. March, Chief oi Staff, 
on November 30, 1918 (19 days after the armistice), issued an order 
authorizing the declaration of a surplus on all perishable food 
products. 

The next step was the declaration of surplus by the Quartermaster 
General ; and the last step was the sale of the surplus supphes by the 
Director of Sales. Notwithstandino; the authorization of surplus 
by the Chief of Staff on the 30th of November, no action was taken 
with reference to declaring a surplus until the month of May, 1919, 
or six months after the declaration was authorized. In the mean- 
time the food was deteriorating and becoming of less value to the 
Goveriunent, and the high cost of living for the American people 
continued. This inexcusable delay resulted in the spoiling of mil- 
lions of pomids of ham and bacon, to the great loss of the Govern- 
ment and the people, who were in need of the meat food products. 
The inactivity of the Goveriunent in the disposition of these food 
supplies was, and is, the result of a well-defined policy of the Secre- 
tary of War to withhold them from the domestic market and to pro- 
tect the interests from which these products had been purchased, 
with the ultimate intention of disposing of them abroad so far as 
circumstances would permit. 

. This policy finds expression not only in the testimony given to the 
committee by tlie officers of the War Department, but in documentary 
evidence as well. As an instance of such intention to prevent the 
American people from purchasing these products, the Quartermaster 
General's Department, through Gen. R. E. Wood, Quartermaster 
General, entered into an agreement with the canners' association 
that some 200,000,000 cans of canned vegetables would be kept off the 
domestic market durmg this season ; this agreement was subsequently 
extended by an order of the Quartermaster General adding these 
canned vegetables to the soldiers' ration in the expressed hope that 
they would be entireh" consumed and that none woiild be left for sale. 
This order would have resulted in a loss to the Government of millions 
of dollars to be derived from the sale of this suridus, as well as de- 
priving the American people of a large quantity of food. 

The purpose as shown by the testimony was to ]irotect the canners 
who had sold the produce, from competition with the governmental 
surplus. 

On July 8, 1919, the surplus of food stored in the United States 
over and above the needs of the Army was, as follows: 

Corn beef 824, 000. 000 

Bacon 23. 000. 000 

Hash corn beef 10. 000, 000 

Roast beef 20. 500. 000 

Fresh frozen meats and poultry 20, 000. 000 

Canned vegetables 23, 000, 000 

This surplus is constantly growing larger, because of the continued 
demobilization of the Army. In addition to these items, there is a 
surplus of millions of cans of fish and milk, and tons of sugar, coffee, 
and tea. It is utterly impossible to estimate the exact value of the 
tremendous quantity of food supplies m the hands of the department, 
a large portion of which is deterioratmg and becoming less valuable. 

During the eight months which has elapsed smce the signmg of the 
armistice only $12,000,000 of food supplies has been sold by the War 

AUS 2 1919 



EXPENDITURES IN THE WAR DEPARTMENT. 3 

Department in the United States, and a very large quantity of that 
sold was spoiled and unfit for the general market, otherwise it would 
not have been placed on sale. 

On July 1 1 of the present year, and after the war expenditures com- 
mittee was appointed, the director of sales issued to the press a 
publicity statement with reference to the sale of meats and vege- 
tables. This statement provides that meat and vegetables shall be 
purchased only by municipalities, and municipalities to pay the 
freight from the nearest warehouse, and to have 10 days in. which to 
make payment to the Government. This plan adopted by the Gov- 
ernment will not result in the sale of these products to any great ex- 
tent, for the reason that most numicipalities, under their charter, 
have no legal authority to purchase food products for sale. Many 
municipalities which have indicated a desire to purchase this food for 
the benefit of their people, have been met with the threat of injunc- 
tion on the part of the local dealers, which threat has been sufficient 
to prevent a purchase of the goods. 

This committee makes recommendation that these food supplies 
be sold without delay on the domestic market to the American people 
who, at great sacrifice, bought and paid for them, and the committee 
looks with disfavor on the policy of exportihg them from America to 
foreign nations for sale and consumption. The committee further 
recommends that plans be devised by the Secretary of War, through 
the War Department, for the early disposition of all surplus food 
products on the domestic market under a system which will grant 
to the American people the opportunity to secure the same for food 
purposes. The committee therefore recommends the adoption of 
the following resolution: 

Be it resolved by the House of Representatives of the United States of America, That the 
Secretary of War be, and he is hereby, requested to place on sale, without delay, the 
surplus food products in the hands, or under the control, of the War Department now 
stored in the United States, under such plan as will safeguard the interests of the 
Government and insure an opportunity to the people of the United States to purchase 
the same, directly from the Government. 

W. J. Graham, Chairman; James A. Frear, 

Clarence MacGregor, Royal C. Johnson, 

0. F. Reavis, John C. McKenzie, 

Oscar E. Bland, Roscoe C. McCullougii, 
Walter W. Magee, Committee. 

Albert W. Jefeeris, 



VIEWS OF THE MINORITY. 

The undersigned members of the Select Committee to Imestigate 
Expenditures in the War Department respectful!}^ submit that the 
resolution proffered b., the majority, if it is to be in any degree 
helpful, must hase certain amendments modifying to a certain 
extent what we understand to be its meaning, and giving the assur- 
ance which should be given if the House deems it proper to make 
such a request as is therein embodied, of a readiness to cooperate 
in all things essential to enable compliance with it. 

The majority have not favored us m their report accompanying 
the resolution with any interpretation of its terms or explanation of 
its purport. 

Indeed, were its sponsors other than they are, it would be difficult 
to repress the suspicion that the resolution was offered, not so much 
in an effort to aid in the solution of one of the complex and involved 
problems following in the wake of the tremendous war brought to 
successful and sudden end by the force of our Nation's arms and aid 
the people in securing food, as it is to furnish an opportunity for a 
sinister criticism in an official report, primarily, of him who bore the 
stupendous burdens of Secretary 'of War during all the time from 
its beginning to its unstained, unsullied, and glorious end, and, second- 
arily, of such of his advisers as fall within the scope of their dislike. 

Without having an expression from them, we might, as we should 
have to do in any event, look closelj to the instrument itself for its 
interpretation. 

The resolution reads : 

Be it resolved by the House of Representatires of the United States of America, That the 
Secretary of War be, and is hereby, requested to place on sale, without delay, the 
surplus food products in the hands, or under the control, of the War Department now 
stored in the United States, under such plan as will safeguard the interests of the 
Government and insure an opportunity to the people of the United States to purchase 
the same direct from the Government. 

We take this to mean that the request is that plan, or plans, be 
immediately developed whereby the remainder of these surplus food 
products shall be sold directly to the consumers without any inter- 
vening agency, or agencies, save those of the Federal Government, 
otherwise we are unable to give intelligent construction to the words 
"direct from the Government," and the resolution requests the 
doing of nothing other than that which the department is now and 
has for some time been doing. 

Undoubtedly there are portions of these foods that may be so sold 
and distributed if the proper organization be established and proper 
agencies created. It has been suggested that the parcel post could 
be utilized, and agents of the Government could be distributed 
throughout the country for their handling and disposition of these 
goods. 



EXPENDITURES IjST THE WAR DEPARTMENT. 5 

All will agree, we take it without hesitation, that if the Government 
itself attempts the disposition in this manner it should ])e general, and 
whatever of benefit may accrue should inure, so far as is humanely 
possible, to all persons and sections. 

It will, as of course, require for such a plan a large organization 
and will involve an expense impossible now to determine, and some 
delay in the distribution under such ])lan will be inevitable. 

We realize very acutely the conditions which exist to-dtiy with 
reference to the high cost of food products. In whatever may be 
done intelligently and justly to alleviate, even in slight degree, this 
condition we are anxious to cooperate, as we feel sure are the Secretary 
of War, his advisers, and subordinates. 

AH recognize that under the law itself, and in morals if there were 
no law, the interests of the Government must be safeguarded and that 
it is the duty of the Secretary to see that this is done so far as lies 
within his power. 

We feel, therefore, that if the House of Representatives is to 
re(^uest by resolution that present plans be changed and that sales 
be made only to consumers direct from the Government, rather than 
through municipalities or individuals or associations, to whom they 
are now being sold in quantities for resale to consumers, that the 
House should also by resolution indicate its willingness to do what it 
would have to do were it expressing itself in legislation, and say that 
it is ready to appropriate the funds essential to the organization and 
development of those plans. We, therefore, respectfully recommend 
that at the end of the resolution the proper punctuation be inserted 
and that there be added the words: 

and the Committee on Aporopriations of the House is requested to ascertain without 
delay and report to the House the sum necessary for the development and execu- 
tion of such plan. 

Unless the House shows a willingness to cooperate in this way the 
country will undoubtedly conclude that we are merely trifling with 
serious conditions and expressing a request in the hope that it may 
not be complied with, rather than in the hope that it will. Because 
all understand that the Secretary of War has no funds available for 
carrying out such a policy and only the Congress can provide these 
funds. 

We beg also to call attention to another phase which assuredly 
must challenge the attention of all reasonable men familiar with 
conditions. 

If this resolution of request were made law, and the Secretary 
were without power to sell other than to consumers, undoubtedly 
great embarrassment would ensue, because there are large quantities 
of these surplus food products so packed and arranged as that few 
consumers would desire to purchase a full package, and when opened 
the contents would deteriorate and it would eventuate in very 
heavy losses. We think it should be made clear, therefore, that in 
making the request, the House does not desire to go on record as 
wishing to interfere with the diseretioii of the Secretary to dispose 
of such products in some other intelligent and just manner. 



6 EXPENDITURES IIST THE WAR DEPARTMENT. 

We, therefore, suggest as a further amendment that after the 
word "delay," m hne — , all the remamder of the resolution be 
stricken out and the following inserted, to wit: 

under such plan as will safeguard the interests of the Government and insure an 
opportunity to the people of the United States to purchase the same direct from the 
Government such part of the surplus food products in the hands or under the control 
of the War Department now stored in the United States as is reasonably capable of 
being so distr buted and sold. 

The resolution in fuU, if the amendments we suggest shall be 
adopted, will then read as follows: 

Be it resolved by the House of Representatives of the United States of America, That the 
Secretary of War be, and is hereby, requested to place on sale, without delay, under 
such plan as will safeguard the interests of the Government and insure an opportunity 
to the people of the United States to purchase the same direct from the Government, 
such part of the surplus food products in the hands or under the control of the War 
Department now stored in the United States, as is reasonably capable of being so 
distributed and sold, and the Committee on Appropriations of the House is requested 
to ascertain, without delay, and report to the House the sum necessary for the develop- 
ment of such plan. 

So much for the resolution. 

Wo turn now to a discussion of the majority report, and at the 
outset feel compelled to call attention to the precipitate haste with 
which the majority report was railroaded into the House. 

Tlie hearings before House Subcommittee No, 4, on the subject of 
surplus food supplies of the Ai'my, were concluded at 4.45 o'clock 
p. m, of July 22. On the 24th of July, one day having intervened, 
the chairaian of the subcoinmittee submitted his report to the general 
committee. Only the members of the subcommittee had heard the 
testimony. The other 12 members of the committee have not even 
had an opportunity to read the testimony, because a large portion of 
it had not been printed. We are advised that it has not been 
printed yet. 

At the session of July 24, notwithstanding the minority members 
protested they had had no opportunity to read the testimon}', the 
majority report was adopted and the minority reserved the right to 
file a minority report. 

On the following day, July 25, Mr. Flood, actmg for the minority, 
presented the following letter to Mr. Graham: 

July 25, 1919. 
Hon. W. J. Graham, 

Chairman Select Committee on Expenditures in the War Department. 

My Dear Mr. Chairman: You will recall that when the question of reporting the 
resolution requesti"ig the Secretary of War to place on sale without delay the surplus 
food products in the hands or under the control of the War Department with the report 
accompanyi"ig it was up for discussion in the committee yesterday the minority 
challenged the accuracy of many of the statements in the report. 

Since the adjournment of the committee yesterday, I have conferred with several 
War Departmevit officials in connection with this matter, and have become satisfied 
that the statements in the report can not be sustained . The committee itself took no 
evidence on these questions, all the evidence having been taken liy Subcommittee 
No. 4. and I feel that there are a number of witnesses who have had control of the 
sale of these surplus food products who should be heard by the committee. I here 
point out some of the erroneous statements in the report which I believe an examiiia- 
tion of witnesses will show to have no foundation in fact. 

1. On page 2 of the report this statement is made: "Notwithstanding the authoriza- 
tion of surplus l3y the Chief of Staff on the 30th of November, no action was taken 
with reference to declaring a surplus until the month of May, 1919, or six months after 
the declaration was authorized." 



EXPENDITURES IN THE WAR DEPARTMENT. 7 

My information is that this statement is incorrect, and that foods were declared 
surplus as rapidly as the taking of inventories would permit in small quantities dur- 
ing months preceding the month of May, 1919, and certain quantities of surplus foods 
were sold prior to this time. 

2. The report further states that in the meaiitime food was deteriorating and becom- 
ing of less value to the Government. 

I am informed that very little food was permitted to deteriorate, namely, 1,500,000 
pounds of ham at Norfolk, which was awaiting shipment to France on requisition, 
and which was promptly sold when released from shipment. Any other items of 
deteriorated food are very minor and inconsequential in comparison ^\'ith the large 
(juantity of food available. 

It is my information that the Government has suffered no financial loss through the 
holding of these surplus foods, for the reason that markets have been stabilized to 
the e.xtent that the Government is recei\nng better returns from the sale of these 
foods than could possibly have been received in the earlier months of this year. 

3. The report further states that "the inactivity of the Government in the dis- 
position of these food supplies was and is the result of a well-defined policy of the 
Secretary of War to withhold them from the domestic market and to protect the 
interests from which these products had been purchased, with the ultimate intention 
of disposing of them abroad so far as circumstances would permit." 

I had a conversation Avith the Secretary of War this morning, and he informed me 
that he had no such policy as indicated in this statement. 

4. With regard to the i^aragraph beginning, "This policy finds expression not only 
in the testimony," etc., may I call your attention to the fact that this paragraph is 
in conflict with the preceding paragraph which states that the surplus stocks are to 
be held for export. This particular paragraph to which T call your attention states 
that Gen. Wood enters into an agreement with the canners whereby the canned 
vegetables will be kept off the domestic market and will be used as soldiers' rations. 
This paragraph goes on to state that in feeding these surplus vegetables to the Army 
the Government would lose millions of dollars derived from the sale of such vege- 
tables. Obviously, if theee A'egetables are required by the Army as rations the use 
of the vegetables in such a manner would not result in a loss to the Government, 
since the soldiers must be fed. 

I do not think the statement in the next paragraph that this action of the War 
Department was for the purpose of protecting the canners who sold their products 
from competition ■with the governmental surplus is a fair statement of the case. 

6. I note the report says there are millions of cans of surplus fish. 

My information is there is no surplus of fish. All canned salmon has been turned 
back to the canners at cost to the Government. The reason for this was the fact that 
this Salmon did not come up to Government specifications and consequently the 
War Department compelled the canners to take it back at the price the Government 
paid for it. 

7. I had taken up the question of sugar, which is greatly needed by the farmers 
now for their canning and preserving, and am informed that there was a surplus 
of sugar. I also ascertained that there was no surplus of coffee and tea as stated 
in the report. 

With regard to the latter part of this paragraph, I am informed that the War De- 
partment does know prettv definitely the total value of the surplus materials on 
hand, while there is very little, if ainv, food permitted to deteriorate, and that food 
is more valuable to-day than it would have been in the early spring had it been 
dumped on the market. 

8. With regard to the statement made that only .|12,000,000 worth of food supplies 
have been sold, I am informed that this figure is incorrect, as large quantities of food 
have actually been sold but reports of sale have not been made to the War Depart- 
ment for the reason that considerable time must intervene between the date of making 
the sale and the time that the report passes through channels to the central record 
bureau. I am informed that the actual reports of sales are largely in excess of 
$12,000,000. 

9. The committee report states that on July 11 a publicity statement was issued 
by the director of sales providing that meats and vegetables could only be purchased 
by municipalities. I am informed that, as a matter of fact, this publicity statement 
did not state that meats and vegetables could be sold only to municipalities, but 
was intended and did convey information having to do with the details whereby 
munici]xilities could obtain surplus meats and vegetables for sale; that it was not- 
the purpose of this article, nor has it been the practice of the director of sales, I am 
informed, to confine sales of meats and vegetables to municipalities. I am infomied 
that a number of sales have actually been made to wholesale grocers and other 



S EXPENDITURES IN THE WAR DEPARTMENT. 

concerns and to individuals, which represents a distribution of surplus foods through 
normal channels. 

In view of the many errors in this report, some of which I have pointed out above, 
I respectfully request that this report be withdrawn from the House and your com- 
mittee take evidence on the questions dealt with by this report, so that the facts in 
connection with the sale of these surplus food products can he ascertained and the 
proper report made to this House. 

And in this connection I would suggest that you siim.mon the following witnesses: 
Secretaiy of War r)aker; Col. C. G. Harvey, General Staff, Chief of the Requirements 
and Statistics Branch, Purchase, Storage, and Trafhc Division; Col. Clyde B. Crusan, 
assistant to Gen. PiOgers; Col. Morris Stayton, Assis^^ant Director of Storage; Col. 
Clarence R. Day, Assistant Director of Storage; Col. Julian R. Schley. Director oi 
Purchase; Mr. E. C. Morse, First Assistant Director of Sales; Maj. E. E. Squier, Chief 
Quartermaster Stores Section, Office Director of Sales; (apt. Clement. Chief, Sub- 
sistence Branch, Surplus Property Division, Office of Director Purchase and Storage; 
Maj. A. L. Mercer, Assistant Director of Sales. 

With much respect, I am, 
Very trulv, yours, 

H. D. Flood. 

Upon the presentation of this letter to the chairman he called a 
meeting of the committee for 4 o'clock p. m. on July 25 and laid 
before it the letter from Mr. Flood. The committee, by a strict party 
Tote, refused to comply with what the minority believed to be a 
reasonable request and rejected the motion to reopen the hearings and 
subpoena the witnesses named in the letter. Because of the distribu- 
tion of the work of the general committee among five subcommittees, 
upon each of which there are two majority members and one minority 
member, four of the minority members could not hear the testimony 
taken by subcommittee No. 4. and were denied the privilege of reading 
it before action was taken. With unseemly haste the majority rejjort 
was forced through the committee, the protest of the minority was 
disregarded, and their plain rights were ignored. 

In view of these facts the minority felt not only justified but com- 
pelled, in the interest of justice and fairness and for the information 
of the House, the ex parte statements of those whom we had re- 
quested should be called and placed upon oath. These have been 
obtained a,nd are filed as an appendix hereto, and we feel that every 
statement of fact presented by us is substantiated bv the testimony 
taken by the subcommittee and the documents so filed. 

In our judgment the majority report is so inaccurate in its state- 
ment of facts and so unjust in its inferences we feel a fair considera- 
tion of the subject matter can not be had without specific considera- 
tion of a number of the statements made in said report. 

DELAY IN DECLARING SURPLUSES. 

The report states: 

NotwithstandiTg the authorization of surpluses by the ( hief of Staff on the 30th of 
NoA'ember, no action was take'i with refere" ce to declari^'g a surplus until the month 
of May, 1919. or six months after the declaration was authorized. 

On the 1st of December, 1918, the day following the order that the 
surplus be determined, 178 officers were called to Washington and the 
special organization necessary to carry on this work was created. On 
the 17th of December these officers were sent to the various zone 
supply offices and camps throughout the country and assumed charge 
of the work in the various supply offices. 



EXPENDITURES IX THE WAR DEPARTMENT. 9 

On Docomber 31 the taking of the inventory began throughout 
the United States. A physical count was completed in 10 days. 
The inventories covered 16 zone supply depots, 3 Army reserve 
depots, 4 large terminals, and over 200 posts. One hundred and 
eighty thousand different items were reported. Ten thousand 
peo]ile were engaged in the work. The inventory and lists for use 
in declaring surpluses were completed on the 30th of April. 

Wlien the armistice was signed, supplies for the Army were being 
gathered from all the productive sources of the country. Ware- 
houses were hUed, countless thousands of cars were on the way to 
the ports, property was accumulated at the wharves. The Quarter- 
master Department had over 15,000 contracts outstanding, involv- 
ing a money value of $1,800,000,000, The amount of supplies 
eventually received under these incomplete contracts required 
months for determination, because it involved the determination 
of the amount of property, including where percentages of the 
products of factories were commandeered, the cancellation and 
partial cancellation of a vast number of contracts, the final valida- 
tion of informal contracts, and also the rejection of supplies not con- 
forming to specifications. 

Accurate inventories had to await the determination of these 
uncertain quantities. The uncertainty as to the amount of surplus 
of various materials was further intensified by the possibility that 
military operations might be resumed and that the total amount of 
men to be rationed has several times been materially reduced since 
last November, due to the fact that demobilization proceeded more 
rapidly than anticipated, and also that the size of the permanent 
Army fixed by the department last January was in June reduced 
materially by Congress. 

In many instances accurate inventories required repiling of sup- 
plies. In others the inventories sufficient for Army purposes lacked 
details necessary to be supplied in order to declare surpluses and 
inform the trade of what was offered. 

The food supplies, vast as they were, were in the aggregate only a 
small proportion of the materials to be inventoried. Surpluses were 
declared and sales made of some food supplies as early as February 
12, 1919 (bearings, p. 94), but a surplus in meats, the principal food 
product, was not declared until the 26th of March, and as finally 
revised, not until the 1st of May. Instead of consuming six months as 
stated in the report, the actual time was five months and one day. 

It must be borne in mind that it was about February 1 before 
Gen. Pershing advised that it was unnecessar}^ for the forwarding 
of additional meats to A. E. F., and that shipments had been con- 
stantly made up to that time (p. 94). 

These facts are a sufficient refutation of the statements of the 
majority report that "no action was taken." 

ALLEGED DETERIORATION BY DELAY. 

The report further asserts : 

This inexcusable delay resulted in the spoiling of millions of pounds of ham and 
bacon to the great loss of the Government and the people. 

The evidence does not sustain this charge. 

The effective general answer to this charge is that out of the first 
$12,000,000 worth of food supplies sold, including the supplies to 



10 EXPENDITURES IN THE WAR DEPARTMENT. 

which the criticism is directed, the Government received over 85 
per cent of the cost to the Government. 

Tiiere was evidence (p. 9) that 2,000,000 pomids of bacon sold at 
Baltimore was deteriorating but the Government sold it for 28f cents 
a pomid. Tliis price was larger than the Government had been 
offered at an earlier date for bacon (p. 20). 

The only other instance of deterioration in meats shown by any 
substantial evidence was 1,487,905 pounds of sugar cured hams at 
Norfolk, Va. This meat was ordered to Norfolk for overseas ship- 
ment, where it arrived in January, February, and March. The 
inspector's report made a few days prior to the' sale states that the 
hams are — 

Sweet and sound, but surfaces are affected by mold, and that if reconditioned at 
once there would be no loss from trimming, as mold in its present condition can be 
removed by thoroughly washing and cleaning same (p. 29). 

This ham was sold for 20 cents a pound (p. 6 1) . 
The evidence as to meat shows — 
The meat is sound to-day and very palatable (p. 2(1 \ 
Mr. Hare, the Director of Sales, says : 

I do not want to get the impression out that we are trying to sell canned stuff that 
is not good, because I think they are (p. 2(5). 

Also: 

My belief is that the vast majority of all our canned stuff is in excellent condition 
and we will find a market for it fp. 35 \ 

In this connection we protest against the injury to the finances of 
the Government that is now b(3ing suffered because of the unwar- 
ranted charges that these food products are not in good condition. 
Such reports have a strong tendency to hamper the Government in 
the sale of these goods to the best advantage. 

There is no evidence of 'millions of pounds" of ])acon or ham hav- 
ing been spoiled, and obviously it must have been in condition to 
meet the requirements of the pure-food law. 

POLICY OF GOVERNMENT IN SALE OF FOOD SUPPLIES. 

The report states that: 

The inactivity of the Government in the disposition of these food supplies was and 
is the result of a well-defined policy of the Secretary of War to withhold them from 
the domestic market to protect the interests from whicb these products had been pur- 
chased with the ultimate intention of disposing of them abroad so far as circumstances 
would permit. 

The policy of the War Department in the disposal of surplus sup- 
plies has changed with changing conditions, but there has never been 
any secrecy about it, and it has constantly been well known to the 
public. Mr. Hare was appointed Director of Sales in January, 1919, 
and on the 27th of that month he gave out a statement (p. 50) in 
which, in substance, the policy to be pursued was defined as follows: 

1. So as to disturb the industrial conditions of the country as little as possible and to 
obtain the best returns for the Government. 

2. Surplus property is to be transferred to another War Department bureau if it can 
use the same. 

3. To sell surplus property to another Government department if needed before the- 
same is put on the market. 



EXPENDITURES IN THE WAR DEPARTMENT. 11 

4. In general, Avhere there is any considerable surplus property it is desired, where 
practical, that an attempt be made to dispose of this material to the original manu- 
facturer or vendor in order that he may distribute the same to the trade. 

5. The last-mentioned method failing, it will be advisable where practicable to 
approach the local board of trade or chamber of commerce or similar organizations 
to see if it will not be possible to dispose of this surplus property to the dealers in that 
class of material in that particular locality v. here the surplus is located. 

6. If a deal is not consummated by any of the above methods, the Government will 
then be at liberty to dispose of it to the public at large. 

Dealers having had goods commandeered protested that a distinc- 
tion should be made in their case and that they should have the 
opportunity of taking the goods back at the price paid b}^ the Gov- 
ernment if they so desired. The Director of Sales disa])proved this 
policy (p. ,51'). The director declared the goods were commandeered 
at a fair profit to the producer and that under the plan tliey suggested 
the party from whom they were conmiandeered would take them 
back onh^ if the present market price was higher than the comman- 
deered price; that as the Government could not compel the dealer 
to take them back if the commandeered price were higher than the 
market price, it would obviously be "a one-sided arrangement" to 
permit such a course. 

The packers offered the use of their distributing facilities and to 
act for the Government in selling canned meats at prices dictated 
by the Government, the,y to be "paid the exj^ense involved. This 
oft'er was rejected (p. 22). 

Air. Hare testified that when it was found the packers w^ould not 
pay a decent price "we said we are through with you" (p. 27). 

Throughout the war it was the announced policy of the Govern- 
ment to confer with the trade in the line of industry affecting the war 
to secure its cooperation and support in the production and delivery 
of supplies required for the prosecution of the war. Most w^ar in- 
dustries were worked to their capacity. Tlie same policy was pursued 
in reference to the producers of food materials. In the main the 
efforts of the industries were commendable, patriotic, and effective. 
At the beginning of the w^ar the canners were called into conference. 
Representatives of the War and Navy Departments attended each 
annual convention of the National Canners' Association and ur^ed 
a maxunum production of canned vegetables. The association 
itself engaged in a publicity campaign to that end. Enormous pro- 
duction was obtained for the season of 1918. The seasotial pack for 
1918 was complete at the signing of the armistice. I^arge amounts 
had been delivered or were in course of delivery to the Government 
on contracts. Government orders,' of course, have been f(n- Army 
consumption. As usual, the local trade had been provided for by 
advance orders. 

There was a comparatively large pack of canned com and canned 
peas, and especially of tomatoes for the season of 1919. Less than 
one-fourth of the canned tomatoes, for instance, remained in the 
hands of the canners on the 1st day of January, 1919, the great bulk 
of the pack having gone into the hands of the wholesalers, jobbers, 
and retailors, with a view of supplying the domestic market. The 
prices of these goods had been fixed by the Government. The whole- 
sale dealers had been restricted in their profits on a percentage basis 
of the turnover. With these conditions confronting the canned 
vegetable trade, the Government was forced to determine its course 
in disposing of its surplus vegetables, having in mind the best return 



12 EXPENDITURES IIST THE WAE DEPARTMENT. 

to the Government and the effect of the Government's pohcy upon 
the general industry of the country. Wliile fundamentally the duty 
of the responsi])le othcials of the Government was to sell at the prices 
and at the times that would bring the best returns to the Government, 
the responsible officials justly took into consideration the situation 
of the industries and labor of the country. On the 4th of June, 1919. 
Mr. Hare, the Director of Sales, appeared before the Military Affairs 
Committee of the House and gave a statement of '' everything that 
we have done to date." He further said: 

I shall appreciate it very much, if it is agreeable to the chairman, to get any advice 
from the committee that they may care to offer. 

In response the chairman of the committee stated: 

I have seen accounts in newspapers suggesting that this stuff ought to be put upon 
the market and be sold for what it will bring. That would probably result in selling 
it for a very low figure. Wliat effect would it have upon those thousands of small 
tradesmen throughout the country who carry on their shelves the commercial canned 
stuff, and what would be the result to business in general if you were to carry out such 
a policy? 

After some discussion the chairman further stated: 

Answering your question and speaking for myself alone, I think the people of this 
country will expect you to get the most money you can for the commodity. (Hear- 
ings, Army appropriation bill, pp. 469, 471.) 

Unquestionably an immediate sale to the highest bidder of all the 
supplies would have meant a sacrifice of the Government's interest, 
as the returns would have been nominal. It seems apparent that from 
the standpoint of Government revenues a plan permitting a gradual 
absorption of the Government's supplies was the preferable course. 

We also believe that the trade of the country had a legitimate 
interest in the situation that to a large degree was not inconsistent 
with the duty of the officials to secure the most favorable returns to 
the Government. 

In this connection, it should be barne in mind that the Government 
had surplus properties following the war aggregating nearly $2,000,- 
000,000. The mere statement of the fact makes it apparent to 
an^^one having only a meager idea of business conditions follow- 
ing the war that justice to the Government and the trade alike 
require that these goods be disnosed of on a plan of gradual absorp- 
tion instead of forced sales. The Government, that had encouraged 
and secured the cooperation of the industries in the production of 
its war necessities, could not in common fairness immediately turn 
around at the conclusion of the war and demoralize prices and 
market conditions which the Government's own activities had 
created and drive the price of stocks in the hands of merchants 
below the price the Government had fixed. 

The policy of the Secretary of War is clearly stated by himself in 
his letter addressed to Hon. H. D. Flood, published in the appendix 
to this report. 

WITHHOLDING OF CANNED VEGETABLES. 

In this connection the report refers to — 

An agreement with the Canners' Association that some 200,000,000 cans of canned 
vegetables would be kept from the domestic market during this season. 

On the .6th of last December, Gen. Wood, Acting Quartermaster 
Gen3ral, wrote a lettsr ti a rsprasntibiva of t.is Natimal Cinners' 



EXPENDITURES IN THE WAR DEPARTMENT. 13 

Association, which was given publicity at the time, declaring- in sub- 
stance that the surplus of canned vegetables would not be placed on 
the market during ''this season." However, the fact is that canned 
vegetables were sold, beginning in February, and the Wood policy 
;^'as wholly abrogated on the 23d day of "May, 1918 (p. 310, 55) 
*Vind offers of sales and sales of canned vegetables have proceeded 
lince that date. 

i In so far as the majority report intimates that the public has been 
deprived of the opportunity to buy canned vegetables of the Govern- 
ment since that date, it is erroneous. A reference to the record will 
show that the chairman of the subcommittee making this report 
{elicited evidence showing that on the 20th of June competitive bids 
were opened on a portion of these canned vegetables. Bids calling 
for the sale of these vegetable supplies as well as canned meats were 
issued, beginning in May. Over 1,500 bids were opened on the 20th 
' of June. 

ORDER MAKING ADDITIONAL VEGETABLES RATIONS. 

The report criticizes an order of the Quartermaster General adding 
canned vegetables to the soldier's ration. It is asserted: 

This order would have resulted in a loss to the Government of millions of dollars 
to be derived from the sale of this siu'plus, as well as depriving the American people 
of a large quantity xjf food. 

No such results followed the making of said order. On the 17th 
of March, Col. Davis, of the Quartermaster Corps, wrote a letter to 
the president of the Canners' Association, stating that acting in line 
with his suggestion, canned peas, corn, squash, and string beans 
would be added to the ration list, which has always contained canned 
tomatoes. 

The effect of this order was not to add to the rations or to waste 
any food ])roduct, it simply furnished our soldiers a greater variety 
of vegetables without adding to the total quantity they received. It 
provided for the consumption of the vegetables the Government had, 
and to that extent relieved the Government of the necessity of 
replacing that quantity of foodstuffs by purchases in the market. 
It did not diminish the food supply of the country one pound. It 
was an advantage to the Government and an advantage to the 
soldier, as it gave him a more varied ration, and which he could not 
have obtained except at the expense of his mess fund. The declara- 
tion that it resulted in a loss to the Government of millions of dollars 
is without the slightest foundation in fact. The statement that it 
deprived the American people of a large quantity of food is equally 
groundless. 

The report fiu'ther states that the purpose of the above order 
''was to protect the canners who had sold the produce from compe- 
tition with the governmental surplus." As a matter of fact the 
1918 pack had practically passed from the hands of the canners 
before the order was made. The order had the effect of contributing 
to the stabilization of the market and relieving the Government of 
the necessity of a forced sale. 



14 EXPENDITURES IN THE WAR DEPARTMENT. 

OTHER SURPLUSES. 

The report states — 

There is a surplus of millions of cans of fish, and milk and tons of sugar, coffee, and 
tea. 

We are reliably informed that the fact is there is no surplus of 
fish and that the quantities of fish which would have constituted a 
siu-plus were rejected and returned to the packers, because it did 
not conform to Government requirements. There is a small surplus 
of milk, only 680,000 cases, and to date there has been declared a 
surplus of 52,000,000 of sugar, all of which has been turned over 
to the United States Sugar Equalization Board and is being dis- 
tributed to meet the needs of the American people. There is no 
surplus whatever of coffee or tea nor is any anticipated. (See letter 
of A. L. Mercer, assistant director of sales, in appendix to this report.) 

SALES TO MUNICIPALITIES. 

The report charges that the Director of Sales has issued a publicity 
statement ''that meat and vegetables shall be purchased only by 
municipalities," they to pay the freight and have a 10 days' credit. 
There is no evidence whatever that the department has in any way 
limited the sale of food products to municipalities, and the fact is 
that it has not. This method of sale was simply adopted as a means 
of giving to the consumers of the country an additional opportunity, 
with the help of municipal officers, to take advantage of the Govern- 
ment's ofl'erings in small quantities, which on account of the lack of 
a retail distributing system the Government has been unable to 
furnish directly to the small purchaser. 

Evidence taken before the subcommittee and in the record shows 
that for many weeks past and at the present time the Government has 
been pursuing independent methods of sale both by bids and direct 
sales to purchasers other than miuiicipalities. This fact is estab- 
lished by the records of sales, advertisements in hundreds of news- 
papers and circulars distributed throughout the country by thousands. 

In this connection the report further states: 

Many municipalities which have indicated a desire to purchase this food for the 
benefit of their people have Been met with the threat of injunction on the part of 
local dealers, which threat has been sufficient to present a purchase of the goods. 

The plan of the department permits the consummation of the sale 
to the consumer without the necessity of municipal funds being used. 
The 10-day credit was extended to permit the municipalities to 
reimburse themselves from the retail sales before being required to 
transmit the cost to the Government. 

Any threats of injunction that may have been made against 
municipalities have undoubtedly been inspired by profiteers, who 
would like to handicap the Government in making an advantageous 
sale of these goods as well as deny the consuming public the benefit 
of the Government's plan. 

H. D. Flood, 
Finis J. Garrett, 
Frank E. Doremus, 
Clarence F. Lea. 



EXPENDITUKES IN THE WAR DEPARTMENT. 15 

Appendix to Minority Report. 

War Department, 
Washington, July 26, 1919. 
Hon. H. D. Flood, 

House of Representatives, 

Washington, D. C. 

Dear Sir: My attention lias been called to the statement contained in a report of 
the Select Committee on Expenditures in the War Department, with reference to the 
disposition of the surplus food supplies held by the War Department. I have also 
your request that I advise you what my policy in this matter has been and is. 

On the 11th of November, 1918, when the armistice was signed, a suspension of 
hostilities took place. Under the terras of the armistice, a resumption of hostilities 
was made possible and a more or less prolonged period followed during which there 
was, from time to time, suggested the possibility of the armistice being denounced. 
Nevertheless the War Department disc(mtinued the transportation of foods to Europe, 
discontinued the mobilization of further forces in this country, and began at once a 
progressive demobilization of men. It suspended existing contracts for the procure- 
ment of supplies and took all possible steps to l)ring about a reduction of war expendi- 
tures. In the meantime, vast quantities of supplies already manufactured were in 
hand and a continued stream of deliveries from manufacturers and producers daily 
increased the stock of tlie department. 

These supplies were of practically every nature; foodstuffs, clothing, implements, 
machinery, vehicles, thousands of items, some ha^'ing little usefulness in civil life by 
reason of their special adaption to Army use, many of them being equally A^aluable 
for peace-time and war-time usefulness. The data in the hands of the department 
with reference to the speed with which demobilization could be effected were neces- 
sarily speculative. How large an Army should be retained, and for how long, required 
to be carefully determined. The situation in Europe, the rapidity with which trans- 
portation home could be supplied, industrial conditions in the United States, were all 
elements to be considered. As a result, it was not possible instantly to place upon 
the market for sale to the general public the supplies held in storage by the depart- 
ment. It was necessary first to make an accurate forecast of the Army's needs; 
second, by proper inventory and examination to determine quantities on hand; and, 
third, to devise methods of disposing of these commodities which would take into 
consideration the perishable nature of some of them and the effect of their sale upon 
producers of raw material and labor conditions in the country. It will be recalled 
that the country was at the moment called upon to readjust itself industrially and 
commercially. The major part of the industrial force of the Nation had been sum- 
moned to the making of war supplies. Its resumption of peace-time occupations 
required markets for the products of labor. The commerce of the country was under 
a system of war conditions involving price fixing and centralized distribution, so that 
if, at such a period, the War Department had inconsiderately tendered its A-ast accu- 
mulations of supplies to the public consumption while it was demobilizing its indus- 
trial and military forces, there would inevitably have resulted, perhaps, a momentary 
cheapening of the market price of certain commodities, but a concurrent and com- 
plete paralysis of industry, whereby the producers of raw material would have been 
discouraged and the manufacturers of finished products unable to resume peace-time 
occupations. 

In December I directed that three principles be followed in the disposal of the Army 
surplus : 

1. The disposal of supplies, as far as possible, through other Government agencies 
and relief commissions. 

2. To take up with the original producer who furnished the article to the Govern- 
ment the question of repurchase, in order that niater'ials mi;..ht be distributed through 
their original and customary channels. 

3. To offer the remaining surplus in the best market or to the public at large with 
full publicity. 

This policy I stated in a letter to the Hon. William E. Borah, of the United States 
Senate, in a letter, December, 1918, a copy of which letter I herewith inclose. 

From tliat time until now I have conferred fre juently with those immediately in 
chan:e of the sales of these products. Careful surveys and resurveys of the Army's 
probable needs have been made, surplus was dclared, and efforts made to devise 
effective ways of placing our sur]ilus on the market, avoiding, wherever possible, 
their disposition to speculatcrs. The War Department did not have and has not the 
means of building a widespread retail system of sale and distribution for these prod- 
ucts. It would require an elaborate and costly organization, reaching over the entire 



16 EXPENDITURES IN" THE WAR DEPARTMENT. 

country. Much progress has been made in effecting sales. Of that, however, the 
Acting Director of Sales has informed you in detail. With the considerations above 
stated in view, I can only summarize by saying that it has been and is the policy of 
the department to sell its surplus in tlie best markets and as speedily as possible, 
relieving the burden upon the Public Treasury by securing as ade^iuate" a price as we 
can and avoiding the incidental disturbances which unconsidered action would cause. 
So far as foodstuffs are concerned, I have given my personal attention to the devising 
of ways to place the Army's sucjjIus of foods in the hands of consumers at the lowest 
possible price in order to relieve, even if but temporarily, Uie high cost of li\dng, an 
object with which I have the deepest sympathy. 
Respectfully, yours, 

Newton D. Baker, 

Secretary of War. 

War Department, 
Purchase, Storage and Traffic Divlsion, 

Office of Director of Sales, 

Washington, July 26, 1919. 
Hon. H. D. Flood, 

House Office Building, Washington, D. C. 
My Dear Mr. Flood: At the request of the Secretary of War I have collected 
certain data with reference to the subsistence situation in the Army since the signing 
of the armistice. 

This report covers the following principal points: The attitude taken by the director 
of purchase at the time of the signing of the armistice, the reasons for any delay in 
declaring food surplus, as well as evidence bearing out the fact that there has been 
no financial loss to the Government because of the apparent delay. 

I l])elieve you will find this report complete, but will be glad to furnish you with 
any fmther information which you may d.sire. 
By authority of the director of sales. 
Sincerely, 

E. (". Morse, 
First Assistant. 



War Department, 
Purchase, Storage and Traffic Division, 
Office of the Director of Sales, 

Washington, July 26, 1919. 
Memorandum for Mr. E. C. Morse, First Assistant Director of Sales. 

1. As you requested, I am submitting a complete report on the canned meat and 
vegetable situation. You asked me to determine the status of contracts, the reason 
for delay in reporting surplus, and whether the Government lost in dollars and cents 
retm-n because of the apparent delay. 

2. Attached market Exhibit A is a statement from Col. Julian L. Schley, director of 
pm'chase, which explains the contract situation. Attached, marked "Exhibit B," 
IS a statement from Col. Norris Stayten, assistant director of storage, which explains 
some of the difficulties in obtaining inventories and consequent reports of surplus. 

3. . Having by way of these memoranda explained the problem confronting the War 
Department in obtaining complete inventories and of knowing accurately what the 
requirements would be, your attention is invited to the fact that surplus canned 
meats were declared beginning in January and running through to March 26, when the 
surplus meat figures were given us in reasonably correct form . On May 5 a conference 
was held, at which time the surplus figures were corrected as follows (the present fig- 
ures are also given) : 



Commodity. 


May 5. 


Present. 


Bacon 


Pounds. 
47,000,000 
38,000.000 
36,000,000 
20,000,000 


Pounds. 
91,178,f)71 


Roast beet 


49,323.768 


Corned beef 


53,231.216 


Corned-beef hash 


37.314,995 






Total 


141,000,000 


231,048.650 







EXPENDITURES IN THE WAR DEPARTMENT. 17 

These meats cost the Government average prices as follows: 

Bacon issue, ser. 8, crates per pound . . $0. 40' 

Bacon issue, ser. 10, 12-pound cans do 46 

Beef, roast, 6-pound cans per can. . 2. 70 

Beef, roast, 2-pound cans do 82 ' 

Beef, roast, 1-pound cans do 51 

Beef, roast, 12-ounce cans do 35 

Beef, corned, 6-pound cans do 2.09 

Beef, corned, 24-ounce cans do 70 

Beef, corned, 1-pound cans do 45 

Beef, corned. 12-ounce cans do 38 

Hash, corned beef, 2-pound cans do 48 

Hash, corned beef, 1-pound cans do 28- 

4. It is next ad\dsable to present to you the efforts made to sell as havins; par-' 
ticularly to do with the statement that it was oiu* desire to export all our foodstuffs 
rather than to place them on the American market. To discuss nothing but canned 
vegetables for the moment, your attention is called to a letter written on December 6 
to the American Canners' Association by Gen. Wood, then director of purchase and 
storage. This letter stated that canned vegetables would not be placed on the 
American market during the canning season. This letter was written upon the urgent 
request of the American Canners' .\ssociation. claiming that if the Government's- 
surplus canned vegetables were immediately placed on the market it would stop' 
jobbers of canned vegetables from placing orders with the canners. which in turn; 
would react upon the farmers, who would not plant vegetables and thus workmen be- 
thrown out of work. Orders are placed by jobbers in January. February, and March 
for the coming crop. These orders are iised as a basis of credit with banks by canners. 
Crops planted are predicated upon these orders placed with canners by jobbers. At 
this time it was anticipated, in any event it was generally thought by canners and 
farmers, that we had a considerably greater surplus than it later developed we actually 
had. This was having a rather demoralizing effect upon the market. 

5. It was assumed by Gen. Wood's organization, in view of the fact that it was 
proposed not to place surplus stocks of vegetables on the American market so quickly, 
that it might be best for the Government to develop foreign markets, particularly 
in view of the food requirements of European nations. The purchase and storage 
organization thought that in ^'iew of the need for food it would have to be supplied 
either by American jobbers or from Army reserve stocks. In any event, it was 
thought this demand, however met, would have the same influence" upon price and 
that the Government's problem was to move the surplus in accordance with existing 
economic conditions, to realize the best return for the Treasury. 

6. In endeavoring to develop a foreign marlcet, purchase and storage was imable 
to secm-e from the sale of this surplus the price it was thought these foods should bring. 
This was largely due to the fact that in the early months of the year no credit arrange- 
ments could be made by foreign governments which would satisfy the Atnencan 
bankers. Attention is also called to the fact that purchase and storage endeavored 
to interest representatives of foreign governments in the purchase of certain surplus 
canned vegetables, but was unsuccessful largely because of the matter of credit. 

7. When we began to get reasonably correct inventories of surplus, it was realized 
that our surplus was not as great as was anticipated. It was further realized that 
jobbers had already placed their orders, that the canning season was apjiroaching 
and that in- view of the world-wide demand for food, the time had come when the 
Government's surplus could be placed on the market without interfering with market 
conditions to the extent of reducing the year's pack, and to bring the dollars and cents 
return. Therefore, Gen. Wood's letter of December 6 to the canners, and which 
was written before the director of sales was appointed, was abrogated on May 23. 
On June 3, as indicated above, a reasonably complete and accurate report of surplus 
vegetables was received by the sales organization. 

8. In the next place the statement is made that large quantities of these vegetables 
deteriorated because of delay. Your attention is invited to the fact that canned goods 
are supposed to keep for a considerable period. Any swells or deterioration in canned 
vegetables should become evident in 90 days and the manufacturers agree to replace 
defective goods if the defects present themselves within a period of approximately 
nine months, or before June 30 for the previous year's pack. As a matter of fact, no 
canned vegetables deteriorated or at least have been sold on a deteriorated basis of 
price. Newspaper articles to the effect that our vegetables are deteriorated have inter- 
fered more than any other one thing with, the sale of vegetables at a good price. 

H. Kept. 171, 66-1 2 



18 EXPENDITURES IN THE WAE DEPARTMENT. 

9. Had the War Department placed its surphls vegetables on the market in the early 
spring, we would have suffered a sacrifice in jirice because of the fact that speculators 
expected to buy Government surplus at a greatly reduced figure. The people cer- 
tainly could not have benefited had a speculator been able to get hold of this surplus, 
and otherwise should this surplus have been placed on the market at this time the 
canners and the producers would not have proceeded with normal plans for the 1919 crop. 
As a result of this fact there would have been a great shortage in canned vegetables, 
which would have forced the price considerably higher than it is at the present time. 

10. It has never been the intention of the Secretary of War to export these canned 
vegetables as against placing them on the American market. It is our policy to sell 
our surplus in the best market that we may place in the Government Treasury the 
maximum dollars and cents return with the idea of lessening taxes that rnucli. It 
naturally follows that where there is a good American market we would most certainly 
sell in that market rather than export. 

11. With regard to canned meats, certain small quantities were reported surplus up 
to March 26 and until May 5, when a very complete and comprehensive report was 
submitted as to that date. Obviously, this report was not absolutely accurate in view 
of the difficulty in obtaining inventories and in view of the rapidly demobilizing 
Army in France and in this country. 

12. On May 5 a meeting was held with the meat packers as similar meetings have 
been held with the producers of various commodities, with the idea of receiving benefit 
from their knowledge and experience in the industry. If you will refer to the minutes 
of this meeting, you will observe that the meat packers suggested that our meats were 
not standard commercial goods in the standard commercial package altogether suitable 
for resale. You will further find in the minutes a statement to the effect that these 
meats might be exported to good advantage. Attention was called to the fact that the 
bacon is of a special Army cure. Therefore, this particular bacon was represented as 
being not altogether suitable to meet domestic demands and difiiculties might present 
themselves in attempting to export this particular commodity. You will further 
observe that the meat packers offered to dispose of this surplus on behalf of the Gov- 
ernment, returning to the Government the full dollars and cents return from the sale 
of this surplus, less whatever their operating expenses might be. 

13. After considerable discussion it was determined best to attempt to dispose of 
these meats in this country by sealed bid, thereby p?rmitting all possible purchasers 
to obtain these commodities. In formulating this policy we had in mind the thought 
that the American public, ha\'ing -virtually paid for these canned meats, were entitled 
to benefit were there any benefits to be received by the sale of these meats in this 
country. It was not deemed expedient to export until domestic markets were ex- 
hausted, neither was it deemed expedient to sell through the packers, owing to the 
fact that the packers are being criticized by the general public. 

14. There was never any agi-eement with them to withhold canned meats from the 
market. Any seeming delay in placing meats for sale is the result of the difficulty in 
obtaining accurate inventories and reports of surplus, our desire to aid in stabilizing 
industry with good wages to workmen, together with our keen desire to obtain the maxi- 
mum dollars and cents return from the sale of canned meats by placing on the best 
markets at the most opportune time. 

15.. As in the case of vegetables there were rumors current in the early months of 
this year to the effect that our surplus was considerably greater than it later proved to 
be. Consequently stock growers were in communication with us, as was the Farmers' 
Grange, requesting that we dispose of our surplus meats in such a way as to affect 
: stock growing as little as possible. Attached, marked "Exhibit C," a're copies of 
^ certain telegrams received by this office. The economic solution of the problem is to 
'be found in the fact that there is a certain amount of surplus which the market must 
: absorb. In view of the termendous demand for foodstuffs from abroad there is ob- 
viously a market for this surplus. It then becomes a question of placing the surplus 
on the market in quantities over a period of time so as to disturb economic conditions 
as little as possible and avoid a panicky condition. The foregoing thoughts explain the 
reasons why we have been in no haste to indiscriminately dump siu-plus meats on the 
market regardless of consequences. 

16. Again statements have been made in publicity articles to the effect that millions 
of dollars worth of surplus meats have been allowed to deteriorate. The only case of 
this kind which has come to our attention is 1,500,000 pounds of ham which was de- 
livered to Norfolk upon requisition from the American Expeditionary Forces in Octo- 
ber. Of the 12,000,000 pounds of ham requisitioned the Army was only able to secure 
6,000.000 pounds, of which the 1,500,000 pounds at Norfolk was a part. Shipments 
were made from Chicago during the months of January, February, and March. This 
.ham remained in Norfolk until the requisition from the American Expeditionary 



EXPENDITUKES IN" THE WAR DEPARTMENT. 19 

Forces was canceled, at which time the Surplus Property Di\'ision of the office of the 
Director of Purchase and Storage was advised of the cancellation. Consequently, on 
May 18 each surplus property of each zone office was telegraphed to offer this meat for 
sale. Sales on the whole lot were consummated on June 2 at a price of 20 cents per 
pound and sold by sealed bids to Harris Bros., of Chicago. 

17. In stating that this meat was deteriorated, attention should be called to the 
fact that it was slightly moldy and required reconditioning to put it into first-class 
salable condition. Ob'viously, this meat could not have been in poor condition or 
the pure-food law would have prevented its resale. There is no question but what we 
sacrified somewhat because of the unpresentable condition of this meat. We paid 
40 cents per pound for it and the market price at the time of sale was 35 cents per 
pound. Your attention is further called to the fact that this market price as quoted 
represents the price at which the packers sell to the dealers under guaranty. We 
can not hope to sell our surplus at the full market price for the reason that we expect 
cash and do not extend any guaranty. So far as we know no other meats have 
deteriorated or have been sold in a deteriorated condition. 

18. Your attention is invited to the fact that we have a surplus of 680,000 cane of 
milk. As you appreciate this but represents a drop in the bucket in so far as the 
daily production of milk is concerned. This commodity does not deteriorate rapidly. 

19. In so far as surplus fish is concerned, your attention is invited to the fact that 
approximately 32,000,000 cans of salmon was turned back to salmon canners at cost. 
The reason being that the salmon did not come up to Government specifications and 
we required them, therefore, to take back these goods. 

20. To date there has been declared surplus a total of approximately 52,000,000 
pounds of sugar, all of which the Army has turned over to the United States sugar 
equalization board, branch of the Food Administration, for distribution throughout 
the United States. In this connection you are advised that offers have been made 
for this surplus sugar by exporters at prices in excess of 2 cents per pound above that 
at which the sugar was being allocated by the sugar equalization board in this country. 
The sugar has been handled in this manner owing to a sugar shortage in certain sec- 
tions of the United States. This sugar is being sold by the qualization board for the 
account of the Government at 10.0879 per pound, which represents the actual 
cost to the Army. In view of the fact that America imports considerable sugar, 
we considered it advisable to take care of the American markets before exporting. 

21. Your attention is called to the number of publicity articles which have 
appeared to the effect that we have millions of pounds of tea and coffee. This infor- 
mation is absolutely contrary to fact for we have absolutely no sm-plus tea or coffee , 
nor do we anticipate having any. 

22. Sales of flour total approximately 70,000,000 pounds, on practically all of which 
cost to the Army has been recovered. Most of the flour sales above referred to have 
been made to the United States Food Administration Grain Corporation and to the 
Navy and Marine Corps, at cost. At the time of the lifting of the regulation requiring 
the use of certain percentage of flour substitutes in the manufacture of bread, the 
Army had left on hand a considerable amount of flour substitutes. Owing to the fact 
that everyone in the trade from the miller down to the retailer, and even the house- 
holder, were stocked up with flour substitutes, there was absolutely no demand for 
these substitutes for human consumption and it has been necessary to develop a market 
among the feed manufacturers in the country. Naturally some of these substitutes 
have deteriorated on account of hot weather and storage conditions, but this deteriora- 
tion has not affected the price obtainable for these for the manufacture of cattle and 
chicken feed. 

23. In disposing of these surplus foods in this country, we were face to face with 
the practical question of distribution. We have neither the personnel nor the time 
necessary to sell these foods direct to the consumer on a retail basis. Our limited 
personnel and our desire to expedite the sale as promptly as possible to take advantage 
of the present market conditions necessitated that these foods be sold in reasonably 
large quantities. As a result of the foregoing thought, we decided that it was advis- 
able to give municipalities an opportunity to purchase surplus meats at approxi- 
mately 20 per cent below cost and vegetables at cost, the idea being that municipalities 
could in turn sell these foods at cost to the people, thereby helping out somewhat 
with the high cost of living. 

24. It is our thought that considerable quantities of canned foods can be sold to ad- 
vantage through municipalities, as we are receiving a number of inquiries from them, as 
covered by Exhibit D attached, possibly tlii-ough large department stores, who are 
willing to dispose of Government surplus at the same price which they pay for these 
stocks and the balance to be sold on the American market at a fixed price set, or at 
this same price for export. 



20 



EXPENDITURES IN THE WAR DEPARTMENT. 



25. For your information we are attaching a tabulated report of sales of surplus 
subsistence or food, marked "Exhibit E," as our records indicate to date. Your 
attention is invited to the fact that reports of sales do not come to rest in the office of 
the Director of Sales until possibly two or three weeks after the sales are made. Conse- 
quently this report is not absolutely complete to date, but it will give you a complete 
and comprehensive idea of the classes of commodities being sold and the period over 
which these sales have been made. Below is a digest taken from the weekly report 
of sales made by the Surplus Property Division as follows: 



Week ending — 



Sales per 
week. 



I Per- 
Sales to I centage 
date. I recov- 
ery. 



April 19 . 
Apr. 26.. 
May 3 . . . 
May 10.. 
May 17.. 
May 24.. 
May 31 . . 
June 7 ... 
June 14.. 
June 21.. 
June 28. . 
July 5... 
July 12.. 
July 19.. 



8197,926 

991,296 

924,165 

1,472 

,301,560 
582,920 
258,516 
677,691 
765,167 
384,858 

;, 778, 227 
179,033 
29,568 

,485,740 



SI, 257, 849 
2,249,145 
3,173,310 
3,174,782 
4,476,342 
5,059,262 
5,317,778 
5,995.469 
6,760,636 
7, 145, 494 
10,923,721 
11,102,7.54 
11,132,322 
12,618,063 



Per cent. 
102.09 
100.84 
100.58 
100. 4S 
100.4 
100.3 
100.34 
94.8 
99.2 
98.7 
90.9 
89.5 
89.3 
85.7 



' All sales made to Apnl 19 included. 



The following sales have been or are being made, but reports of sales have not 
reached this office: Sugar, $4,570,000; bacon, $2,242,900; corned beef, $1,668,750; 
canned vegetables, $2,600,000, canned tomatoes, $3,000,000. Total, $14,061,650. There- 
fore the grand total sales of subsistence to date amounts to $26,679,712. This very 
clearly establishes the facts in our minds that sales are being made just as rapidly 
as possible and as conditions warrant. The grand total surplus subsistence in pos- 
session of the War Department as of July 12 amounts to $123,703,504, a part of which 
has been recently declared surplus. For your information we have received not less 
than 85.7 cents on the cost dollar on all surplus foodstuffs sold to date. 

26. On July 9 a publicity article was issued to the effect that the War Department 
would sell surplus food to municipalities. On July 11 a second statement was issued 
amplifying the first to the extent that this article explained the method whereby 
municipalities could obtain surplus food. This article went on to state that munici- 
palities might have 10 days' credit, thereby permitting cities to obtain surplus foods, 
sell them, and return the proceeds to the Government in those instances where the 
city charter would not permit an outright purchase. This publicity statement did 
not state as issued from this office, nor was it intended to imply that food would be 
disposed of entirely through municipalities. 

27. As an illustration of the truth of this statement we want to call to your attention 
the fact that in May it was decided to offer for sale in the United States by advertise- 
ment and sealed bids all surplus canned meats. About 20,000 circular letters, gi^-ing 
information regarding this sale, were sent to all State, municipal, and charitable 
institutions, as well as dealers, jobbers, and exporters. In addition to this, news- 
paper advertising was used. Bids were received and opened June 20. Abstracts 
thereof were made and submitted to the Secretary of War with recommendations 
that all be rejected' due to the fact that they did not show an adequate recovery. 
The Secretary approved these recommendations and authorized sale of bacon and 
canned meats at not less than certain minimum prices, also to municipalities in not 
less than carload lots at prices approximating 80 per cent of the original cost. 

28. Likewise, of our total quantity of canned meats we have sold approximately 
5,000,000 pounds of bacon at a price above the minimum price set by the Secretary of 
War at which bacon and other meats, on which a minimum price was s,et, could be sold 
to purchasers such as Louis Leavitt, of New York; Kurtz-Wilson, commission mer- 
chants, of Baltimore; and W. S. Sawrie & Son, meat dealers, of Nashville, Tenn. 
These parties have purchased the total of 5,000,000 pounds of bacon, having been 
sold out of our entire surplus. 

29. Likewise, final determination of surplus canned vegetables was arrived at June 
3 and instructions were immediately given to offer same for sale in the United States 



EXPENDITURES IN THE WAR DEPARTMENT. 



21 



by advertisement and sealed bids to be opened June 30. Due notice of this was given 
not only by newspaper advertising but by circular letters to all State, municipal, and 
charitable institutions, and dealers, jobbers, and exporters, as a result of which 1,572 
different bids were received from all zones throughout the covmtry. 

30. These bids were forwarded to Washington by each zone, where a master abstract 
was made and recommendations of awards prepared, which was submitted to the 
Secretary of War and approved by him. The bids on canned vegetables were received 
as a whole from the leading wholesale grocers throughout the United States, as well as 
department stores and retailers. As a whole, the bids received were not of a specula- 
tive character and no speculative bids were accepted. 

31. The following table shows the quantities of vegetables disposed of by sealed bids 
recently opened and the balance remaining for sale : 



Recommended sales. 



Left from 
offering. 



To be 
declared 
surplus. 



Total 
available 
surplus. 



Corn, cans, 17,442,890 

Peas, cans, 6,439,316 

Beans, stringless, cans, 351,955 

Beans, baked, No. 1 cans, 3,262,890. 
Beans, baked, No . 3 cans, 13,416,310 
Beans, baked, No. 2 cans, none 



1,611,951 

4,224,383 

1,894,801 

92,496 

52,464 

(1) 



12,749,803 

13,943,959 

1;,054,0M 

5,853,216 

1,178,095 

833, 289 



14,361,754 

18, 168, 342 

2,948,865 

5,945,712 

1,230,559 

833,289 



1 None. 

32. The foregoing report has been presented in great detail that you may have m 
your possession the facts as I find them. I want to advise you that I feel personally 
indebted to Col. Schley, Col. Stayton, Maj. Squier, and Capt. Clement for their 
splendid assistance and invaluable cooperation in obtaining the facts embraced 
herein. 

A. L. Mercer, 
Assistant Director of Sales. 



Exhibit A. 

War Department, 
Purchase, Storage and Traffic Division, 
Office of the Director of Purchase and Storage, 

Washington, July 26, 1919. 
From: Director of purchase. 
To: a. L. Mercer, Assistant director of sales. 

1. Probably never in the history of the world has a production approached that 
which was obtained in this country and which was at its height in November of 1918. 
Based on requirements furnished by the General Staff, purchases of foodstuffs were 
'n progress for 5,000,000 men, for the coming year. Many manufacturers of commer- 
cial articles had been persuaded to transform their plants into production of war 
materials, and their commercial production of commodities not needed for war had 
been reduced to an absolute minimum. 

2. Relative to canned vegetables and fruits, attention is invited to the fact that these 
are seasonal products and that allotments of the possible output of the country for the 
use of the military forces was made by the Food Administration a year in advance and 
covering the requirements for a year. Of the 1918 pack, this resulted in reservations 
for the Army of 45 per cent of the tomato pack, 25 per cent each of the peas and corn 
packs, and 15 per cent of string beans pack. It so happens that, in the early part of 
November, the canning season had just closed and therefore the canning of the allot- 
ment for the coming year was practically completed and the delivery of these goods 
to the Army was at its height. 

3. On November 7, immediately upon the receipt of the rumor in this country that 
an armistice had been signed, telegrams were sent from the office of the director of 
purchase to suspend all purchases except food, forage, and other necessary articles, 
until further orders. On the same date telegrams were sent from the Subsistence 
Division to stop all purchasing of canned vegetables and canned and dried fruits allotted 
by the Food Administration. The object of this immediate action was to stop 
promptly the tremendous production of war material which had been developed during 
the war. 



22 EXPENDITURES IN THE WAR DEPARTMENT. 

4. An order was issued by the director of purchase on November 9, directing that 
all purchases for immediate needs be first referred to his office for approval and. that 
all orders and contracts which had not yet been placed be submitted to his ofhce 
for action. The piu-pose of this order was to place in the hands of the director of 
purchase, himself, complete control of further production in order to be certain that 
it would not exceed the needs of the Army imder the changed conditions. 

5. The purchase service then proceeded to inspect the outstanding contracts in 
order to determine which should be canceled immediately and which should be 
permitted to continue. In the case of food stuffs and forage, it must be remembered 
that the Army was still in existence in sj.)ite of the armistice and that the men and 
horses had to be fed. The purchase of perishable food stuffs, therefore, which were 
being bought from time to time and not stored for future consumption, as in the case 
of canned goods, was continued and was tapered off as demobilization reduced the 
requirements. 

6. The outstanding contracts might be divided generally into two classes: First, those 
for articles not needed because of the cessation of hostilities; and second, those which 
would be needed. Contracts for articles not needed may again be diidded into two 
classes: First, those which could be terminated immediately; and second, those which 
could not be terminated immediately. This second class includes contracts the imme- 
diate cancellation of which would have disrupted the industry, doing material 
damage to the contractor, to the farmer, and to labor. The tremendous production 
of war materials which the country had entered into had acquired a momentum 
which could not, in the case of some classes of supplies, be stopped at once without 
doing irreparable damage to the industries of the coimtry. Production was stopped as 
quickly as it was possible to do so, in the opinion of those in charge at the time, without 
seriously damaging the industries of the country. 

7. Every effort has been exercised since the armistice to prevent piu-chase of articles 
already in the possession of the Army and such piurchases have been made only in 
case of great emergency or where shipment of articles already in stock would have 
involved a greater expense than the additional procurement, and in such cases the 
purchase was confined to immediate needs.. 

8. The outstanding contracts of the Quartermaster Department at the time of the 
armistice niunbered approximately 16,000, involving a total monev value of 
$1,800,000,000. 

9. Machinery was immediately set up for negotiating termination proceedings 
and for the consideration of the claims which naturally arose out of the cancellation 
of these outstanding contracts. This work is progressing satisfactorily. 

J. L. Schley, 
Colonel of Engineers, United States Army, Director of Purchase. 



Exhibit B. 

War Department, 
Purchase, Storage and Traffic Division, 
Office of the Director op Purchase and Storage, 

Washington, July 25, 1919. 
Memorandum for Mr. A. L. Mercer, assistant director of sales. 

In compliance with your request for information as to the delay in declaring food 
surpluses, the following is submitted: 

The first point to be considered is that on NoA^ember 11, the entire production of 
munitions and food supplies of this country can be likened to an enormous engine, 
that was built to go in one direction only, with no brakes or reverse for stopping. 

On November 11, when the hostilities ceased, due to the signing of the armistice, 
the first task that confronted the authorities charged with the supply of the Armj' was to 
bring this enormous engine to a stop the best way they could. The enormous produc- 
tion built up was caused by the fact that those in authority had to go on the assump- 
tion that the war would last for years, and in no way could slacken up until the armis- 
tice was signed. It was impossible to stop at once the forward tendency of this engine. 
As it was gradually brought to a standstill, the problem became one of rebuilding, so 
as to reverse the process, and dispose of the vast amount of stores that had accumulated. 

Due to the speed of production and inherent confusion accurate record of the amount 
and location of this vast quantity of stores was not possible. It was therefore neces- 
sary before any attempt could be made to dispose of surplus stocks that a complete 
inventory had to be taken in order to determine our stocks. For this purpose, it was 



EXPENDITURES IN THE WAR DEPARTMENT. 23 

decided that rather than trust to the usual inventory required by Army Regulations, 
due to the greatness of the problem involved, that a special organization be set up for 
the purpose of taking this inventory as of December 31. 

For this purpose 178 officers were called to Washington on December 1 , and received 
instructions in the methods to be used in taking this inventory. On December 17, 
this body of officers was sent to the various zone supply offices and camps. An officer 
was designated by the commanding officer of each post and military station for the 
purpose of taking the inventory at his station. These officers were assembled in the 
zone supply office of their zone for the purpose of receiving the instructions from the 
officers sent from Washington, mentioned above. 

On Decemlier 31 this inventory started throughout the United States. The physical 
count M^as completed in 10 days at all posts, stations, and depots. These reports were 
then brought to Washington and consolidated. When it is considered that this vast 
quanty of P. & S. supplies were scattered throughout the country in 16 zone supply 
depots, 3 Army reserve depots, 4 large port terminals, and from 200 to 300 posts, it is 
obvious that the task of determining the amount and location of these supplies was a 
problem in itself. To illustrate, there were some 180,000 different items to he counted, 
reported, and consolidated. To do this, it took approximately 10,000 people to com- 
plete this work. Inventory was completed on April 30 and a list prepared for the use 
of declaring surpluses. 

Naturally the time involved changed the condition of some of the stocks, princi- 
pally sul)sistence items. A system of monthly stock reports, continuing from Decem- 
ber 31 on, enal)led this list to be made of value. The above involves only the articles 
handled by the Purchase and Storage Service and was exclusive of our property in 
France. 

Instructions of Gen. March, issued on November 30, to dispose of surplus perishable 
foods in the possession of the War Department were obeyed as rapidly as information 
could be obtained as to their location. For your information, it has never been con- 
sidered that canned vegetables and meats were of a perishable nature. In fact, they 
have always been considered articles to be kept for from one to two years. Any 
deterioration taking place in these articles usually takes place within 90 days. 

Aside from the article of smoked ham. which somewhat deteriorated in storage at 
Norfolk, there has been practically no deterioration of food supplies in the Army. 
It is safe to say that the total loss from all causes, which includes spoilage of individual 
cans of canned goods, the loss through leakage and breakage throughout all the com- 
missaries in the country averages approximately $13,000 per month. This is a remark- 
ably good shoAving, when it is considered that the average amount of subsistence- 
stores handled during a month runs considerably into millions of dollars. 

Your attention is also invited to the fact that the Army program, as announced 
giving the rate of demobilization was considerably greater in actual practice. This 
continued to increase the amount of surplus stocks of these food supplies, and made it 
difficxilt to obtain accurate data upon which to declare surpluses. One point to be 
considered in the time elapsing between the signing of the armistice and the actual 
declaration of surplus food supplies is the fact that'an armistice did not necessarily 
mean a cessation of hostilities. In fact, on several occasions between the signing of 
the armistice and the actual signing of the peace treaty by the German Nation it 
looked as if hostilities might be resumed, and while this will probably be answered 
by the statement that we were demobilizing men, your attention is invited to the 
fact that to recall the men would be a comparatively easy task, when compared with 
the task of obtaining food, if we had gone blindly about selling what might be con- 
sidered surplus. It was absolutely necessary that these surpluses be accurate whea 
making this declaration, for it would have been fatal had hostilities been resumed, 
and no food available for the Army necessary to continue overseas. 

I believe the above explanation gives the reason for the ap])arent delay in the 
declaration of surplus food supplies on the part of the War Department. 

From the above it can readily be deduced that there was no way in which this 
declaration could be hastened, except by bl'ndly selling food that may have been, 
needed by the Army had conditions changed. 

There is one other point that occurs to me. That is, that in order to enable articles 
of food to be placed upon the market, there is certain commercial information that 
must be obtained before any selling organization can dispose of the same and that 
this information was never made a matter of record by the War Department, as it 
was not a selling organization. For instance, a can of bacon was a can of bacon^ 
irrespective of as to by whom it was packed or by what brand it was commercially 
known. 

NoRRis Stayton, 
Colonel, Quartermaster Corps, 
Assistant Director of Storage. 



24 EXPENDITURES IN THE WAR DEPARTMENT. 

Exhibit C. 

[Telegrams resales canned vegetables received by director of sales' office.] 

Brooklyn, N. Y. 
C. W. Hare, 

Director of Sales, Munitions Building, Washington, D. C: 
Having no reply to my letters 9th and 13th, am uncertain regarding recent develop- 
ments in sales surplus canned vegetables. Understand canners conferring with you 
to-day wholesale grocers have stated to you in detail their opinion regarding the 
distribution of these goods. Can only add without question the sale of the surplus 
tomato stock at this time will have a disturbing effect upon the market, probably 
more so than the sale of other vegetables. Will appreciate information as the situation 
develops. Wholesale grocers of the United States are greatly interested in this matter 
both financially and for economic reasons. 

Walter B. Timm.s. 



Denver, Colo. 
C. W. Hare, 

Director of Sales, United States Army Munitions Building, Washington, D. C: 
On March 17 this year and under direction of Gen. Rogers, of the United States 
Army, a letter was written emljodying in it that there would be no canned vegetables 
dumped on the market. Canners in the United States have relied absolutely upon 
this letter and have gone ahead with acreage for this year. It is very disastrous to 
canners. now if you allow Army goods to go on the market at less than reproductive 
costs or until domestic market will consume them. We feel it imperative to ask 
that you withhold the tomatoes until they are needed for the domestic market. 

The Colorado Canners' Association. 



Hurlock, Md., June 17, 1919. 
W^illard G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, D. C: 
In my judgment, the Government should sell tomatoes on hand and relieve the 
cloud hanging over the business. Have talked other canners who approve plan. I 
pack about 50,000 cases yearly. 

Roland Webster. 

Baltimore, Md., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, D. C: 
If stock of canned tomatoes carried by Army to be sold, we favor of disposing of 
them immediately. 

Roberts Bros. 



Dover, Del. 
WiLLARD G. Rouse, 

Care Judge Covington, Evans Building, 

New York Avenue, Washington, D. C: 
By all means, Government should dispose holdings immediately if do intend to 
redeem promise not to dispose of them. We packed last year 135, 000 cases tomatoes. 
If held until later menace will have very serious effect on operations for coming 
season, and we shall not attempt more than one-third. Views of neighboring packers 
•coincide with ours. 

C. M. Scott Packing Co. 



Salisbury, Md., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, Munitions Building, 

Washington, D. C' 
By all means insist on War Department selling surplus stock tomatoes before canning 
season. All canners here want this stock sold at once. 

J. D. Elliott. 



EXPENDITUEES IN THE WAE DEPARTMENT. 25 

Preston, Md., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Properly Division, Munitions Building, 

Washington, D. C: 
By all means sell immediately the Government tomatoes if they are to be sold 
before December, 1919. Other packers think same. 

W. M. Weight. 



Federalsburg, Md., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, Munitions Building, 

Washington, D. C: 
All Government tomatoes should be sent Em-ope if sold. This country should be 
used to stabilize prices slightly above present level. Our houses pack 107,000 cases. 

S. D. & R. W. Messenger. 



Preston, Md., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, Munitions Building, 

Washington, D. C: 
Majority of canners we talk to think Government should hold goods until January 1 
if only 2,000,000 cases now. Probably Government can dispose of considerably more 
by that time at much higher price than they can obtain at present time. Fiu-ther- 
more, if Government goods put on market now there is no ciuestion that some of them 
will be unsold when our new pack comes on. Sold on sealed bids will uiidoubtedly 
sell at below to-day's market and utterly demoralize prices from now through packing 
season. 

N. H. FooKS & Co. 



Seapord, Del., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, Munitions Building, 

Washington, D. C: 
If it is the intention of the Government to sell surplus stock tomatoes, we think 
sooner this is done the better for the business. These are also the views of H. P. 
Cannon & Son, Bridgeville. We usually pack about 70,000 cases. 

Greenabaum Bros. (Inc.). 

Ridgeley, Md., June 17, 1919. 
Wm. G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, D.C. 
Would advise unloading canned corn and tomatoes at once. 

Swing Bros. 



East Newark, N. J., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, D.C. 
It is my judgment the Government should sell surplus tomatoes at once. I believe 
this action will be to the best interests of the packing business. I pack usually about 
100,000 cans. Urge Government to sell. 

Chas. Webster. 



Dover, Del., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, D. C. 
By all means Governnaent should dispose holdings immediately if do intend to 
redeem promise not to dispose of them. We packed last year 135,000 cases tomatoes. 
If held until later, menace will have very serious effect on operations for coming 
season, and we shall not attempt more than one-third. Views of neighboring packers 
coincide with ours. 

CM. Scott Packing Co. 



26 EXPENDITUKES IN THE WAR DEPARTMENT. 

Salisbury. Md., June 17, 1919. 
Wn>LARD G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, I). C: 

Think Government goods should be sold immediately. Other packers have same 
opinion. 

J. Cleveland White. 



Philadelphia. Pa., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, D. C: 
We feel that if the Government must sell their surplus stocks of canned goods in 
this country that it should be done at once, as a continual cloud is hanging over the 
entire canning industry, which produces anything but a healthy condition. We 
usually pack about 150,000 cases per year. 

Talbot Packing & Preserving Co. 



Dover, Del., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, D. C: 
Evidently the same sense of moral justice which prompted a zone price of one 
ninety five for Maryland against a zone price of one eighty seven for Delaware will 
govern, so what difference does it make what the "goats of the war," the packers, 
think would be equitable? We fail to see any equity, justice, or law by which a 
country, which went abroad to make the world safe for democracy, can autocratically 
commandeer for a specific purpose, in a great many instances at less than actual cost, 
and then use these commandeered goods to put these same industries out of business. 

James F. Allee, Jr., 
President Liberty Brand Canning Co. 



Vienna, Md., June 17, 1919. 
WiLLARD G. Rouse, 

Care Col. Glover, Surplus Property Division, 

Munitions Building, Washington, D. C: 
The Government last year stimulated production and took the goods by allotment 
at bare profit over cost. We think it distinctly unfair and grossest bad faith to sell 
these goods in any manner calculated to break this year's market and ruin packers' 
business, probably for several years; packers not only ones affected. All farmers and 
foremen in packing districts would be damaged. Government should market at 
this time only such quantity as can be absorbed without upsetting stability of 
market conditions. Every effort should be made to find export market and lay 
foundation for future export business. Balance should be reserved at least 12 
months or until required to make up scarcity. 

Winfield Webster & Co. 



Kansas Lr^e Stock Association, 

July 15, 1919. 
Hon. Charles Curtis, Hon. Arthur Capper, Hon. D. R. Anthony, Jr., Hon. 
Edward C. Little, Hon. Philip P. Campbell, Hon. Homer Hock, Hon. James 
G. Strong, Hon. Hays B. White, Hon. J. N. Tincher, Hon. W. A. Ayres, 

Washington, D. C. 
Dear Sirs: I am writing you regarding the much talked of Government-owned 
meat. We have made some investigation regarding this matter and find there is 
quite a supply of frozen beef in storage in this country that was purchased by the 
Government during the war for shipment abroad. We also find there is a considerable 
quantity of canned meats owned by the Government. We have noticed through the 
press tliat the Government is offering quantities of this meat in this country for sale 
and that the bids for same aggregated from 25 to 50 per cent of the actual cost of the 
meat, and it appears that there have been a few sales made of this product at these 
reduced prices. 



EXPENDITURES IN THE WAR DEPARTMENT. 27 

To our mind there are only two ways of disposing of this meat by the Government: 
First, if it is to be disposed of in the United States it should be handled through some 
Government distributing agent in the cities where the population is composed of 
employees of manufacturers, etc. In other words, we feel that if the Government 
is going to make a sacrifice of the prices of this Government-owned food that it should 
make the sacrifice direct to the consumer and thereby give the laboring people and 
poorer people an opportunity to buy this food at the reduced price. 

It is e\'ident that if this meat is sold to packers or to traders that it will not reach 
the consuming public at a price commensurate with what the Government received 
for same and therefore would be to no advantage to the consuming public but a great 
disadvantage to the producers of meat products. 

Second, if the Government can not arrange to distribute this meat in line as above 
indicated and will necessarily have to sustain a material reduction in the cost price 
that they should make arrangements to export these products to feed the hungry 
people of foreign countries. 

By shipping this product out of the country it will be surely to the advantage of 
the meat producers of the country. 

The farmers and producers in the United States responded patriotically to the call 
of the Government for increased production and the consumers of meat also responded 
to the demands of the Government for conservation in the eating of meats. This of 
course on account of the war. Now that the war is over the Government surely should 
lend every aid and assistance possible to the purchaser in protecting him against the 
slaughter of the prices of his product. 

It is oAddent, however, by turning loose in the markets all the Government supplies 
they may have had in store when the armistice was signed would not be safeguarding^ 
the producers' interests. 

Speaking for the members of the Kansas Live Stock Association and also as a mem- 
ber of the National Producers' Committee, I protest against the War Department 
selling to packers, traders, or distributors of meat of any kind the supply of meat 
owned by the Government at this time. 

I earnestly urge you as the representatives of Kansas in Congress to use your influence 
in this matter in safeguarding as best as possible the producers of beef and mutton of 
our State and in fact the producers of the entire country. 
Yours, very truly, 

J. H. Mercer, Commissioner. 

Exhibit D. 

War Department, 
Purchase, Storage and Traffic Division, 

Office of the Director of Sales, 

Washington, July 25, 1919. 
Memorandum for Mr. Mercer. 

Subject: Sales of the canned meats and vegetables to municipalities and negotiations 
inaugurated by the cities for such supplies as reported by surplus property offices. 

1. At the request of Mr. Morse, Col. Nixon sent telegrams on July 22 to the 18 
surplus property officers detailed to the zone supply offices and depots at which 
supplies of canned meats and vegetables are available, asking a report on sales made 
to date to municipalities and an enumeration of the cities by which negotiations had 
been inaugurated. 

2. Appended is a summarization of the reports received from the surplus property 
officers at the following posts: 

3. Boston, July 23. No canned goods shipped to date to municipalities. Negotia- 
tions are underway with 14 New England cities. (Names not given.) Facts relative 
to these negotiations are embodied in letter en route to Washington. 

4. Baltimore, July 23. Sales to municipalities to date are as follows: 
Baltimore: One hundred and fifty cases roast beef, 175 cases corned beef, 200 cases 

corned-beef hash, 100 cases pumpkin, 15,000 cans tomatoes, 15,000 cans peas, 13,600 
cans corn, 11,300 cans pork and beans, 2,100 packages cornstarch, and 60 gallons 
sirup. 

District of Columbia: Two hundred cans bacon, 4,000 cans baked beans, 2,000 cans 
corn, 2,000 cans peas, 6,000 cans tomatoes, 100 dozen cans corned beef, 100 dozen 
cans roast beef, and 100 dozen cans corned-beef hash. 

Cumberland Md.: Eighty cases bacon, 300 cases tomatoes, 200 cases corn, 25 
cases corned beef, 4,000 packages cornstarch, 50 cases peas, 50 cases pork and beans, 
50 cases pumpkin. 



28 EXPENDITURES IN THE WAR DEPARTMENT. 

Altoona, Pa, : Five tons bacon, 200 cases tomatoes, 200 cases corn, 200 cases peas, 
and 100 cases pork and beans. 

5. Negotiations are now being conducted by that office with the cities of Pitts- 
burgh, Pa.; Reading, Pa.; Scranton, Pa.; Bradford, Pa.; Latrobe, Pa.; Butler, Pa.; 
Allentown, Pa.; Keyser, W. Va.; Suffolk, Va.; and Frederick, Md. The quantities 
embraced in these negotiations approximate 25 carloads. 

6. The Baltimore office is also in communication with approximately 50 other 
cities, by which definite negotiations have not yet been inaugurated. 

7. Philadelphia, July 23. No canned goods stored in that zone. Inquiries from 
municipalities received at Philadelphia are referred to Washington. 

8. Columbus, Ohio, July 23. No canned goods have been shipped to municipalities. 
No negotiations are in progress. 

9. Atlanta, Ga., July 23. The following goods have been sold to municipalities: 
Three thousand pounds bacon, 706 1-pound cans roast beef, 2,200 2-pound cans roast 

beef, 2,000 2-pound cans corned beef hash, 1,600 No. 2 cans corn, 3,000 cans hominy, 
2,200 No. 2 cans peas, 3,600 No. 3 cans sweet potatoes, 75,000 No. 2 cans tomatoes, and 
11,000 No. 3 cans tomatoes. 

Negotiations are being conducted with the mayors of Pittsburgh, Pa.: Mobile, Ala.; 
Florence, S. C; Greenville, S. C; Daytona, Fla.; and Gainesville, Ga. No defmite 
quantities have yet been specified for by these cities. 

10. Omaha, Nebr., July 23. No canned goods have been sold to municipalities 
No bids have been received from municipalities. 

11. San Francisco, Calif., July 23. No sales of canned goods have been made to 
municipalities. No negotiations are reported. 

12. New Orleans, July 23. No goods have been shipped to mimicipalities. None 
are being negotiated for. Inquiries have been received from Bii'mingham, Ala., and 
Houston, Tex. 

13. Jeffersonville, Ind., July 23. No negotiations with mimicipalities have been 
inaugurated. No canned goods in storage at this depot. 

14. Newport News, Va., July 24. The following sale has been made to the city of 
Newport News: Thirty-two cases corned beef. 

15. St. Louis, Mo., July 24. No goods have been sold to municipalities. No 
negotiations are now being conducted with cities. Several inquiries from cities have 
been received. 

16. New Cumberland, Pa., July 23. No canned goods have been shipped to munici- 
palities. Negotiations for approximately 10 carloads are now being carried on with 
the cities of Wilkes-Barre, Scranton, Harrisburg, York, Pittsburgh, Jolmstown, and 
Warren, Pa. 

17. According to the incomplete report received by the Surplus Property Division 
from zone supply offices and depots, sales to 6 municipalities have been consum- 
mated; negotiations are being carried on -with 37 other cities; and inquiries as to the 
commodities offered, the quantities available, and the prices asked have been received 
from 52 additional commimities. Six of the zone supply offices and depots to which 
Col. Nixon addressed his telegram of inquiry have not yet responded. Included in 
this number is the Chicago zone supply office. I am unofficially advised that Chicago 
has received numerous inquiries from central western elites. 

B. A. Mattingly. 
Acting Chief Sales Promotion Section 
P. S.^ — -Baltimore reported to-day (Saturday, July 26) by telephone that, in addi- 
tion to the sales reported in the telegram of July 23, it has consummated sales with 
the cities of Wilmington, Del., Pittsburgh. Pa., and Allentown, Pa., and is now 
negotiating with 30 of 40 other cities. 

The surplus property officer at New York reported to-day that he has begim negotia- 
tions with 10 cities, the names of which were not given . 



EXPENDITURES IN THE WAR DEPARTMENT. 29 

Exhibit E. 

Recapitulation of sales and transfer of subsistence by months. 

February 1207, 330. 85 

March 9.1, 195. 16 

April 1, 869, 602. 33 

May 1, 904, 445. 76 

June 4, 568, 677. 36 

July 604, 835. 40 

Grand total 9, 246, 086. 86 

This tabulation has been hiuriedly prepared and is not complete. 

Attention is directed to the fact that the bases of our records are formal reports 
received through channels after sales are consummated, and that due to the limited 
personnel and tremendous quantity of such reports covering all items same are not 
finally entered on oiu records until two or three weeks after sales are finally completed . 

We, of coiu*se, get informal reports which show that the total of sales of foodstuffs 
according to our records of July 19, are $12,618,063 on sales which have been made, of 
which official report has not been received, amoimting to $14,061,650, a total of 
$26,679,712. 



30 



EXPENDITURES IN THE WAR DEPARTMENT. 



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